January 17, 2018

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Opinion

Manitoba performing well without carbon tax

Unfortunately for taxpayers, Premier Brian Pallister’s carbon tax doesn’t come with a money-back guarantee if it doesn’t deliver promised results. We already know Pallister’s carbon tax is costly.

He’s proposing a tax of $25 per tonne of carbon next year — much higher than the initial federal requirement of $10 per tonne. That means Manitobans will see fuel prices jump by about five cents per litre. In total, it will cost Manitobans $260 million every year.

But what about the results?

Pallister is promising two things.

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BORIS MINKEVICH / WINNIPEG FREE PRESS Files</p><p>Premier Brian Pallister wants a carbon tax of $25 per tonne.</p>

BORIS MINKEVICH / WINNIPEG FREE PRESS Files

Premier Brian Pallister wants a carbon tax of $25 per tonne.

Unfortunately for taxpayers, Premier Brian Pallister’s carbon tax doesn’t come with a money-back guarantee if it doesn’t deliver promised results. We already know Pallister’s carbon tax is costly.

He’s proposing a tax of $25 per tonne of carbon next year — much higher than the initial federal requirement of $10 per tonne. That means Manitobans will see fuel prices jump by about five cents per litre. In total, it will cost Manitobans $260 million every year.

But what about the results?

Pallister is promising two things.

First, a carbon tax will reduce emissions. Second, based on those reductions, the province will be able to stop a federal carbon tax that’s scheduled to rise to $50 per tonne over five years.

The problem is Pallister provides no support for either promise. The provincial government’s climate plan doesn’t show how a carbon tax will reduce emissions.

All it offers is a speculative list of "potential indicators" it might monitor, including: 1) a reduction in gasoline and diesel sold; 2) the ratio of Manitoba’s GDP to gasoline and diesel consumed; 3) the increase in adoption of alternatives (e.g. ratio of gasoline to electric vehicles purchased); and/or, 4) economic competitiveness impacts by sector such as exports.

While Pallister provides no analysis on these "potential indicators," the Canadian Taxpayers Federation recently ran the numbers and produced a report entitled "Keeping Score: Measuring Manitoba’s Environmental Performance." The results are remarkable.

Let’s look at the first "potential indicator" — the volume of fuel sold annually. Canada’s overall fuel sales went up by 4.5 per cent from 2011-15. In British Columbia, where a carbon tax has been in place since 2008, fuel sales went up by 5.34 per cent.

Meanwhile, in Manitoba, fuel sales went up only three per cent. Manitoba is already outperforming Canada and B.C. on this "potential indicator" even without a carbon tax.

Manitoba’s performance is even better on the fuel-consumption-to-GDP ratio.

Canada’s overall fuel-consumption-to-GDP fell by 6.88 per cent from 2011 to 2015. British Columbia did a bit better with a reduction of 8.65 per cent. But, again, Manitoba’s performance on this "potential indicator" is significantly better with a 12.12 per cent reduction, even without a carbon tax.

The third "potential indicator" is indecisive. In Canada overall, only 0.7 per cent of new vehicles purchased are electric.

In B.C., it’s only 1.05 per cent. In Manitoba it’s 0.11 per cent. For the moment, electric cars are a small part of the picture with more than 98 per cent of car buyers sticking with traditional cars.

The fourth "potential indicator" is baffling. How is the province planning to measure competitiveness and which exports will it watch? This "potential indicator" is too vague to specifically analyze beyond the obvious point that a carbon tax that increases the cost of doing business will make Manitoba less competitive.

Let’s look again at Pallister’s promises.

If a carbon tax will reduce emissions, wouldn’t B.C., with its established carbon tax, be outperforming Manitoba? According to the province’s "potential indicators" that isn’t the case. What about Pallister’s promise that Manitoba’s higher initial carbon tax will protect the province from a higher federal carbon tax in the future?

That promise is based on a legal opinion suggesting that Manitoba could fight a federal carbon tax if the province’s environmental policies prove more effective than national standards. Presumably, that case would be built on the province’s performance on the "potential indicators" it cites.

But Manitoba is already outperforming the nation, as well as B.C. and its carbon tax. If Pallister wants to fight the federal carbon tax, he doesn’t need to impose a carbon tax that’s more than double the initial federal proposal. Manitoba already has a compelling case to contest a federal carbon tax.

There’s a real risk Manitobans won’t get the benefits Pallister is promising, but there’s no refund on the millions they’ll pay in carbon taxes until then.

Todd MacKay is prairie director of the Canadian Taxpayers Federation.

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